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4 Singapore REITs With Data Centre Exposure For Your Retirement Portfolio

As the world becomes increasingly digital, data centres will continue to be vital.


We continually generate data, from uploading this article to the internet to large companies collaborating with each other over the cloud.

And we are set to generate even more data as we digitalise more of our economy, a trend that has been hastened by the COVID-19 pandemic.

According to IDC, data usage is set to grow at an annualised rate of 24% through 2025. All those data need to be stored somewhere, and that’s where data centres come in.

Data centres own and manage servers and networking facilities that customers can use to store and access data.

Those who are looking to benefit from this growing sector can look into data centre real estate investment trusts (REITs) or REITs that own data centres in their portfolio to invest in.

With that, let’s look at four REITs with data centre exposure in this latest edition of 4 Stocks This Week.(note: REITs below are arranged according to the value of data centre assets under management). 

Mapletree Industrial Trust (SGX: ME8U)

Mapletree Industrial Trust (SGX: ME8U) is a REIT with a portfolio of 85 properties in Singapore and 56 properties in North America (which includes 13 data centres held through the joint venture with its sponsor Mapletree Investments).

Data centres account for over half of Mapletree Industrial Trust’s assets under management (AUM) of S$8.8 billion.

Source: Mapletree Industrial Trust earnings presentation

Singapore and North America are split almost evenly in terms of overall geographical asset distribution.

For Mapletree Industrial Trust’s latest quarter of 1QFY22/23 which ended on 30 June 2022, its gross revenue surged 31.0% year-on-year to S$167.8 million, while its NPI grew 24.0% to S$129.9 million.

The REIT’s strong performance was mainly due to the contribution from the acquisition of 29 data centres in North America.

Meanwhile, Mapletree Industrial Trust’s distribution per unit (DPU) continued growing, increasing by 4.2% to 3.49 Singapore cents.

Something that stands out for Mapletree Industrial Trust is that it has a large and diversified tenant base with low dependence on any single tenant or trade sector. So those investors who are looking for both data centre exposure, on top of exposure to other sections such as manufacturing and financial services, can look into this REIT.

At Mapletree Industrial Trust’s unit price of S$2.41, it has a price-to-book (P/B) ratio of 1.3x and a distribution yield of 5.8%.

Keppel DC REIT (SGX: AJBU)

Keppel DC REIT (SGX: AJBU) has a portfolio of 21 data centre assets strategically located across nine countries, including Singapore, Australia, and the United Kingdom. In all, its assets under management stood at S$3.5 billion as of 30 June 2022.

Source: Keppel DC REIT investor presentation

For the first half of 2022, Keppel DC REIT posted higher distributable income and DPU increase of 2.5% year-on-year to 5.049 Singapore cents largely due to contributions from:

  1. New acquisitions in China, the United Kingdom, and the Netherlands,
  2. Completion of a data centre in Australia,
  3. Asset enhancement initiatives in Singapore and Dublin data centres, and
  4. Investment in bonds issued by M1 Network Private Limited.

Keppel DC REIT’s portfolio occupancy was healthy at 98.2%, and its weighted average lease to expiry remained long at over seven years, as of 30 June 2022.

Source: Keppel DC REIT investor presentation

Looking ahead, the REIT said that “industry trends such as the continued acceleration of digitalisation, adoption of technologies such as 5G and artificial intelligence, and rise of virtual reality communities will continue to bolster demand for data centres”.

At Keppel DC REIT’s unit price of S$1.78, it has a P/B ratio of 1.3x and a distribution yield of 5.6%.

Digital Core REIT (SGX: DCRU)

The most recent REIT to list in Singapore is Digital Core REIT (SGX: DCRU), going public in December 2021.

Digital Core REIT’s portfolio includes 10 freehold data centres that are situated in premier locations in the US and Canada. As of 30 June 2022, its portfolio value stood at US$1.5 billion (around S$2.1 billion).

The properties have a 100% occupancy that are leased out to high-quality clients, including Fortune Global 500 companies.

Source: Digital Core REIT investor presentation

Digital Core REIT announced its maiden set of financial results in July.

For the six months ended 30 June 2022, it declared a DPU of 2.06 U.S. cents. It is also giving out 0.31 U.S. cents from the date of the initial public offering (IPO) on 6 December 2021 through 31 December 2021. Digital Core REIT’s gross revenue came in at US$52.8 million, while net property income stood at US$35.4 million.

In April this year, the REIT’s fifth-largest customer (which represents around 7% of total revenue) filed for bankruptcy protection. Digital Core REIT managed to sign a cash flow support agreement with its US-listed sponsor Digital Realty (NYSE: DLR) to cover any cash flow shortfall related to this customer bankruptcy up till 31 December 2023.

In turn, Digital Core REIT has to repay any cash flow support received from its sponsor, interest-free, anytime from 1 January 2024 through 31 December 2028.

As of 30 June 2022, Digital Core REIT’s gearing ratio stood at 25.7%. Therefore, it has plenty of debt headroom to gear up to acquire new high-quality assets from its sponsor to cover up any gap left by its fifth-biggest client.

At Digital Core REIT’s unit price of US$0.70, it has a P/B ratio of 0.8x and a distribution yield of 5.9% (after annualising the 2022 first-half DPU of 2.06 cents).

9 Things To Know About Digital Core REIT Before Investing In This IPO

CapitaLand Ascendas REIT (SGX: A17U)

CapitaLand Ascendas REIT (SGX: A17U), previously known as Ascendas REIT, is Singapore’s first and largest listed business space and industrial REIT.

As of 30 June 2022, the REIT owned a total of 228 properties across three segments – Business Space and Life Sciences; Logistics; and Industrial and Data Centres. Those properties are located in countries such as Singapore, Australia, the United States and the United Kingdom.

In terms of data centre exposure, out of S$16.6 billion in asset value, data centres occupy just 9% of its total asset size. So that equates to around S$1.5 billion worth of data centre properties.

Source: CapitaLand Ascendas REIT investor presentation

For the first half of 2022, CapitaLand Ascendas REIT reported gross revenue of S$666.5 million, increasing by 13.7% year-on-year. Contributions from newly acquired properties and a built-to-suit development in Singapore mainly led to the growth in top-line.

Meanwhile, net property income grew 7.0% year-on-year to S$476.9 million, and the total amount available for distribution increased by 6.3% to S$330.7 million. After taking into account an enlarged number of outstanding units, CapitaLand Ascendas REIT’s DPU rose 2.8% to 7.873 Singapore cents.

At CapitaLand Ascendas REIT’s unit price of S$2.69, it has a P/B ratio of 1.1x and a distribution yield of 5.8%.

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4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.